09.06.2021 – 09:36
Developing countries are lagging behind in pandemic recovery and face the risk of a renewed economic downturn if vaccine supplies fail to materialize and global inflation rises, the World Bank warned on Tuesday.
Emerging economies are particularly vulnerable, she said, as rising prices and interest rates undermine their ability to deal with the high levels of debt accumulated during the coronavirus crisis.
“As advanced economies recover, many of the world’s poorest countries are being left behind and much remains to be done to reverse the staggering human and economic costs of the pandemic.”, the bank said in its bi-annual Global Economic Prospects report.
“For more,” she added, “Recovery is not assured: the possibility of additional Covid-19 waves, further vaccination delays, rising debt levels or rising inflationary pressures remains a barrier.”
He said the short-term resumption of economic growth worldwide could not offset the misery the pandemic has caused to the poorest. Per capita income losses caused by 2020 would not be completely reversed by 2022 in about two-thirds of developing and developing countries, he said, and in 75 percent of the most fragile, conflict-affected economies .
By the end of this year, about 100 million people will fall back into extreme poverty since the start of the pandemic, the World Bank estimated.
“Globally coordinated efforts are essential to accelerate vaccine delivery and debt relief, especially for low-income countries.” said David Malpass, president of the World Bank.
The report stressed the need to expand the distribution and deployment of vaccines as a precondition for a sustainable global cure.
However, he did not mention the production of vaccines or the growing demands for the suspension of intellectual property rights by pharmaceutical companies to deal with supply shortages. Last month, the US backed a temporary suspension of such rights to Covid-19 vaccines, leaving the UK and the EU as the main opposition to such action.
Speaking to reporters, Malpass said the World Bank did not support the removal of IP rights because doing so could jeopardize research and development costs.
“The World Bank supports licensing and technology transfer to developing countries to strengthen global supply.” he said. “A very critical part of the supply chain is the invention and creation of production techniques. Above all, as we move into the reinforcement phase, it will be vital that flows [e kërkimit dhe zhvillimit] continue to grow so that we can create vaccines that apply to new variants. ”
The Washington-based institution singled out the record level of debt worldwide, especially among developing and developed countries, as a threat to economic stability. She said the global financial system was vulnerable to a sudden rise in interest rates if there was an increase in risk aversion among investors, inflation or expectations of faster monetary tightening.
Consumer price inflation is likely to exceed expectations this year in half of all emerging economies setting such targets, the report said. If growth is temporary, and consumers and investors continue to believe that the targets will be met, policymakers may be able to leave monetary policy unchanged.
“If, however, inflation expectations risk becoming uncompetitive, [tregu në zhvillim dhe ekonomia në zhvillim] central banks may be forced to tighten monetary policy more than would be appropriate ”, the report warned.
Ayhan Kose, director of the World Bank Prospects Group, which analyzes changes in the global economy, said higher inflation could complicate the policy choices of the poorest countries in the coming months, as some of them still rely on measures of expansion support to ensure a sustained recovery.
“If rising inflationary pressures cause market participants to worry, they could cause an increase in risk premiums.” he said. “Developed markets and emerging economies are vulnerable because of their record high debts. “In the event of market disruptions, capital outflows may force them to tighten policies in a way that could stifle their recovery.”
Translated and adapted for Konica.al by Financial Times